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ABP on course for equity increase despite markets

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NETHERLANDS – Europe’s largest pension fund, the NLG331bn Heerlen based ABP pension fund for Dutch civil servants and teachers, says it is on course to complete its increased exposure programme to equity, despite taking a hit on its funding buffer last year due to the adverse market conditions....

Presenting its full investment results for 2000 to the Dutch market today (May 9), the ABP board revealed that the fund’s overall return for the year of 3.2% comprised an expected setback of –3.9% in equities but was bolstered by strong figures of 8.9% in fixed income and a stellar return of 22.9% on real estate assets.

According to performance measurer WM, Dutch pension funds recorded an average deficit of –5.2% in equities last year.

However, the fund noted that the poor markets in 2000 had impacted on its funding buffer, which has reduced from 122% of liabilities to 117%.

Nevertheless, Jean Frijns, CIO at ABP, says this will not put the fund off its current strategy of increased equity exposure, although he believes it may delay the process a little. “ We have reassured journalists and members of the public today that the position of ABP is still sound. We were heavily influenced by exceptional conditions last year, but we have reserves for stock market volatility and this makes it possible to pursue our investment strategy, which is a further increase in our exposure to equity.”

Frijns says the fund will not automatically rebalance its equity exposure: “We will follow a buy and hold policy and each month will buy an additional amount of equities. “ The actual growth of our equity exposure last year was lower than the planned growth due to the market conditions, but we are still on course. We may reach our target a year later but it is still the same target of 52%.”